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Posts tagged ‘Recession’

Caught in a capital trap

By David Mc Williams

Our economy is going backwards. Latest figures from the CSO reveal that the economy has shrunk since last summer.

We are now contracting at a pace last seen in 2009, when the wheels really began to come off. The Irish economy has contracted now for three quarters in a row.

Throughout recent recorded history, recessions last on average ten months. This recession is completely different, both in terms of its scope and its depth. We are seeing a massive double-dip recession led by a depressed local economy, which is compounded by the delayed effects of austerity in Europe.

Domestic consumption is cratering. According to the figures, in January to March of this year, consumption fell by 3 per cent. This is the largest fall in the whole recession – even including 2009 and 2010. Investment, too, is down 7 per cent and even exports, usually the bright point on the Irish economic landscape, were down 3 per cent in the first few months of the year:

full article at source: http://www.davidmcwilliams.ie/2013/07/01/caught-in-a-capital-trap

Time for Greece to Bring Back the Drachma?


austerity (Photo credit: 401(K) 2012)

Five years into an economic depression of epic proportions, one would have thought that the Greek government should be raising serious doubts as to whether the oft-repeated troika recipe of severe fiscal austerity is going to produce any different economic results this time around. And one would also have thought that the time has long since passed for the Greek government to start seriously exploring alternatives to a policy approach that offers the country the bleakest of prospects of many more years of a deepening economic depression and extraordinarily high unemployment.

The U.S. Example

Normally, in the midst of a deep economic slump, countries follow countercyclical policies to extricate themselves from the slump and to avoid a downward deflationary economic spiral. They do so by some combination of fiscal policy stimulus, interest rate reduction, and exchange rate depreciation.

full article at source: http://finance.yahoo.com/blogs/the-exchange/time-greece-bring-back-drachma-173957240.html

‘The S&P Is On The Verge Of The Ultimate Death Cross’


The U.S. is already in a recession according to Societe Generale’s bearish  analyst Albert Edwards.

Earlier this month Edwards said companies  could see their incomes drop 30 – 40 percent because of the recession, and  that the S&P 500 could see its index halved to 666 points.

And he is basing this on a decline in analyst optimism that is a good leading  indicator of economic activity:

“Regular readers will know that we have always  followed analyst optimism closely (optimism here defined as the percentage of  analysts EPS forecast changes that are upgrades). We have shown previously that  it is not the level of analyst optimism that is important for the equity market,  but the change in optimism. Somewhat surprisingly we have found that the change  in analyst optimism tends to be a very good leading indicator of economic  activity (it mirrors almost exactly the OECD and Conference Board leading  indicators), but it is published on a far more timely basis, and more  importantly it is not subject to revision in the way the economic data and  leading indicators are.

Hence we note that the aggregate monthly analyst optimism data has  slid below the previous lows of last year and the year before, to the sub-40%  mark. This has taken the 6-month change in optimism back into negative  territory, which is beginning to drive the equity market back into bear market  territory.”

This chart shows the 6-month change in optimism

Read more: http://www.businessinsider.com/albert-edwards-sp-on-verge-of-ultimate-death-cross-2012-7#ixzz21dwNQ5rD

Now Cometh the Eurozone ‘Recession’

by Staff Report

EU predicts 0.3 per cent eurozone economic contraction in 2012, says bloc in ‘mild recession’ … The European Union estimates that the economy of the 17 countries that use the euro is in recession in the wake of a debt crisis that has prompted savage spending cuts and a jump in unemployment to record highs. The European Commission, the executive arm of the EU, forecasts that the eurozone economy will contract by 0.3 per cent in 2012 and grow by 1 per cent next year. Its prediction for 2012 is far weaker than the one it gave last November, when it predicted growth of 0.5 per cent. A year ago it was predicting growth of 1.8 per cent. Friday’s forecasts provide clear evidence of the impact of Europe’s debt crisis on the eurozone economy over the past year as governments have struggled to introduce deficit-reduction measures and business and consumer confidence has taken a dive. Olli Rehn, the EU’s monetary affairs chief, said the recession is likely to be “mild” and “short-lived.”

full article at source: http://www.thedailybell.com/3880/Now-Cometh-the-Eurozone-Recession

Monetary System In Ruin, Signals Of Systemic Collapse

By: Jim_Willie_CB

Wow!! The billboard signals of extreme crisis are overwhelming. Three years
of near 0% with no recovery. A full year of ample USTreasury and mortgage bond
monetization with no recovery. Tons of cash aid deliveries to the big US banks
with no recovery. Some key corporate nationalizations with no recovery. Oodles
of errant stimulus programs with no recovery. Some important misdirection in
home loan aid initiatives with no recovery.

The US Federal Reserve admits it can do nothing more as a recovery remains elusive. The USGovt is paralyzed by disguised fascist warmongers opposed by disguised marxist collectivists, but intent on maintaining the status quo among bank fraud. An approved accounting fraud directive is kept in place to present a picture of bank solvency.
Intermediate credit markets have come to a standstill.

The US stock market is in tatters. The USTreasury Bond market is the only
conventional rally at work. And with all these programs, developments, and
events, the USEconomy moves toward a recession with relentless determination
and purpose, In today’s age of lying about price inflation by at least 5%, that
means the recession is about to turn into a Minus 5% Recession after never
exiting the recession recognized in 2009.

The billboard messages are dire, ugly, dreadful, dangerous, and full of destruction, typical of systemic failure. Too bad the Keynesian textbooks do not have a chapter on banking
system insolvency, or one quarter of the households living in negative equity,
or central bank toxic paper pits, or global currency war, or confiscation of
tyrant accounts. The ineffective monetary & fiscal policy has ushered in
the nightmarish systemic failure. That is what is occurring.

Full article at source: http://www.marketoracle.co.uk/Article30577.html

The Lesser Depression


Fred R. Conrad/The New York Times

These are interesting times — and I mean that in the worst way. Right now we’re looking at not one but two looming crises, either of which could produce a global disaster. In the United States, right-wing fanatics in Congress may block a necessary rise in the debt ceiling, potentially wreaking havoc in world financial markets. Meanwhile, if the plan just agreed to by European heads of state fails to calm markets, we could see falling dominoes all across southern Europe — which would also wreak havoc in world financial markets

We can only hope that the politicians huddled in Washington and Brussels succeed in averting these threats. But here’s the thing: Even if we manage to avoid immediate catastrophe, the deals being struck on both sides of the Atlantic are almost guaranteed to make the broader economic slump worse.

In fact, policy makers seem determined to perpetuate what I’ve taken to calling the Lesser Depression, the prolonged era of high unemployment that began with the Great Recession of 2007-2009 and continues to this day, more than two years after the recession supposedly ended.

Let’s talk for a moment about why our economies are (still) so depressed.

The great housing bubble of the last decade, which was both an American and a European phenomenon, was accompanied by a huge rise in household debt. When the bubble burst, home construction plunged, and so did consumer spending as debt-burdened families cut back.

Everything might still have been O.K. if other major economic players had stepped up their spending, filling the gap left by the housing plunge and the consumer pullback. But nobody did. In particular, cash-rich corporations see no reason to invest that cash in the face of weak consumer demand.

Nor did governments do much to help. Some governments — those of weaker nations in Europe, and state and local governments here — were actually forced to slash spending in the face of falling revenues. And the modest efforts of stronger governments — including, yes, the Obama stimulus plan — were, at best, barely enough to offset this forced austerity.

So we have depressed economies. What are policy makers proposing to do about it? Less than nothing.

The disappearance of unemployment from elite policy discourse and its replacement by deficit panic has been truly remarkable. It’s not a response to public opinion. In a recent CBS News/New York Times poll, 53 percent of the public named the economy and jobs as the most important problem we face, while only 7 percent named the deficit. Nor is it a response to market pressure. Interest rates on U.S. debt remain near historic lows.

Yet the conversations in Washington and Brussels are all about spending cuts (and maybe tax increases, I mean revisions). That’s obviously true about the various proposals being floated to resolve the debt-ceiling crisis here. But it’s equally true in Europe.

On Thursday, the “heads of state or government of the euro area and the E.U. institutions” — that mouthful tells you, all by itself, how messy European governance has become — issued their big statement. It wasn’t reassuring.

For one thing, it’s hard to believe that the Rube Goldberg financial engineering the statement proposes can really resolve the Greek crisis, let alone the wider European crisis.

But, even if it does, then what? The statement calls for sharp deficit reductions “in all countries except those under a programme” to take place “by 2013 at the latest.” Since those countries “under a programme” are being forced into drastic fiscal austerity, this amounts to a plan to have all of Europe slash spending at the same time. And there is nothing in the European data suggesting that the private sector will be ready to take up the slack in less than two years.

For those who know their 1930s history, this is all too familiar. If either of the current debt negotiations fails, we could be about to replay 1931, the global banking collapse that made the Great Depression great. But, if the negotiations succeed, we will be set to replay the great mistake of 1937: the premature turn to fiscal contraction that derailed economic recovery and ensured that the Depression would last until World War II finally provided the boost the economy needed.

Did I mention that the European Central Bank — although not, thankfully, the Federal Reserve — seems determined to make things even worse by raising interest rates?

There’s an old quotation, attributed to various people, that always comes to mind when I look at public policy: “You do not know, my son, with how little wisdom the world is governed.” Now that lack of wisdom is on full display, as policy elites on both sides of the Atlantic bungle the response to economic trauma, ignoring all the lessons of history. And the Lesser Depression goes on.

Recession or Depression?

I picked this off the Independent .i.e. site this morning This is the kind of news most people in employment are now fearing is it any wonder that the consumer is not spending and the more stories we see in the news media like this the more likely this recession will become a spiralling depression .with no leadership coming from our elected members of the Dail people will have to come up with their own solutions

THE OWNER of a toy shop last night defended his decision not to give staff any warning that the store was shutting down at close of business yesterday.

Speaking just before he handed his 17 workers their P45s, Vida Akauskien, who has worked in the shop for the past eight years, said: “I know the country is in an economic crisis but how can they treat people like that?”
Fergal Crinnion said soaring rates and service charges had forced him to put Tommy’s Wonderland at the Blanchardstown Shopping Centre into liquidation.

Mr Crinnion insisted there was nothing underhand about his decision to keep staff in the dark until the last minute saying: “With bad news, when you need to know it, you just need to hear it quickly.”

Shocked staff last night expressed outrage to the Irish Independent after they learned by word of mouth on Friday that the business was being liquidated and their jobs were gone with immediate effect.

Just minutes after the last sale was rung up, the shutters came down and work on removing remaining stock from the shop began. The stock will be transported to a warehouse to be assessed by the liquidator. Workers, some of whom have worked at the shop for over 15 years, will receive statutory redundancy and holiday pay.



full article at http://www.independent.ie/business/irish/staff-devastated-at-sudden-closure-of-shop-2084141.html

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